LP&L leaders discuss timeline for 2019

RFP in question as EUB looks toward 2019

With a goal to reach a decision by the end of the year, planning for the city’s power procurement after the 2019 deadline is expected to take a few more steps forward as Lubbock Power and Light’s governing body meets to set a timeline at a specially called meeting today, March 3.

With ultimately five options on the table, LP&L spokesman Matt Rose said members of the Electric Utility Board will narrow down the choices to the most viable options.

“This meeting is going to be more focused towards funneling down where the board wants to go in terms of options and setting a more concrete timeline for where we expect to be over the next two, three, four months in this decision-making process,” he said.

This is the second meeting of this kind in the new year. At the last specially called meeting, the board and the Lubbock City Council took a comprehensive look at all of the options behind closed doors.

“The board chair (Greg Taylor) felt it was very important, seeing that there were five members of the board, to get everyone in the same room and get everyone caught up to speed,” Rose said. “To that end, it was a very successful meeting.”

There were no action items on the schedule for the first meeting, as the point was not to make a decision but to take a fresh look at the possible options for power generation in 2019 and beyond.

The second meeting in the series will get the ball rolling to set a definitive timeline for the electric generation search.

“Council members have been involved in all of the meetings up to this point, as well as city staff,” Rose said. “On the council’s end, the board wants to make sure that they’re comfortable that all the research has been done to justify any decisions that are made over the next few months.”

To help with continuing that research, Black and Veatch, a Kansas firm specializing in utility infrastructure, will make another presentation to the board. At that point, the members will decide whether or not to continue with the company to conduct further studies on the options deemed feasible.

“I think we have to make a decision as far as are we going to build our own plant or are we going to have a purchase power agreement with somebody else,” said Mayor Glen Robertson.

The available options include building a city-owned power plant, buying a power plant from a third-party through a purchase power agreement, continuing to buy power from Xcel Energy, buying electricity though another wholesaler or joining the Southwest Power Pool integrated marketplace.

For some LP&L leaders, however, the options have already been narrowed down.

“It takes about 42 to 48 months to build a combined cycled electric generation, and that seems to be the way they are leaning — that’s definitely the way the CEO (Gary Zheng) wants to go,” Robertson said.

This option was surrounded by controversy late last year after accusations arose that the request for proposal for a possible power plant issued by LP&L in May was rigged.

On Oct. 18, Robertson called for an investigation, and though a third-party law firm declared it unbiased, many are still wary.

Before continuing with option examination, deciding on a course of action for the investigated RFP is the top priority, according to Robertson.

“I think really there are two valid choices. I know there are some board members that think there are others, but you either reject any and all bids or you award the bid to someone,” Robertson said.

Because the bidding process was tainted by controversy, Robertson said his choice would be to discard all of the bids and start from scratch.

“I don’t think it was a clean RFP, and I think there is way too much potential for litigation to move forward with it,” he said. “My hope is they all decide to make the decision on that and then move forward in laying out a plan for a new RFP and getting the consultants to work.”

The board will vote on the issue during the open session, although member Charlie Dunn doubts there will be much controversy.

“I can’t speak for anyone but myself, but my sense is that everyone is going to want to kick out that RFP and we will start over,” he said.

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First @Mow: I think you already know this but for the benefit of those who don't know: Our region of Texas is not in the ERCOT power grid so this news does not effect us. Deregulation in that part of Texas has led to a situation where companies are unwilling to risk expenditures to construct new power plants that will only run during peak load conditions. This has caused a power shortage at times when loads peak and/or when certain large power plants are off line for maintenance. We are actually within the Southwest Power Pool electric grid.

What to do about LP&L's power situation? Here is what I would do. Throw out the past bids since there is a perception they are tainted and start again. Black and Veatch has already been hired as a consultant. Contract with them for the duration of the project moving forward. They are a highly respected consulting engineering firm (among other services). Let them manage the next RFP. Then, assuming we are building a power plant, let them manage the EPC (engineering, procurement, construction) contract and serve as our onsite representative until the keys are handed to LP&L.

The mayor needs to think differently. He said "I think we have to make a decision as far as are we going to build our own plant or are we going to have a purchase power agreement with somebody else". This doesn't have to be an "or" situation. It could be an "and" situation much like we have now. LP&L currently has a purchased power contract for 100% of our power needs while at the same time contracting to supply the output of our existing generation.

I would build enough generation to control our own destiny and then explore the new SPP integrated market place to see what purchased power options exist. It could be that we could contract for a very diversified purchased power portfolio while selling the output of our new generation into that market to bring in the revenue needed to pay off the project. This approach mitigates risk.

Point being, building a generator will not get any cheaper. There are units in the Big Country (newer than units Xcel still has running) which are shut down. My company had a contract at a combined cycle plant in Sweetwater that went on-line in 1989. It was down the last time I was down there and had been for several years. A shame that we do not have a 345 KV line to that plant. Encogen One was the name, I do not remember the total output. I do remember H2O being a large problem and they had a closed cooling cooling system.

You are exactly write. What city leaders need to do is visit other municipal electric utilities in ERCOT to see how they are dealing with the wholesale market. SPP Integrated Marketplace is modeled after ERCOTs model market. They need to build a plant and join the integrated marketplace and make it work for the city. This will keep the rates low and if managed properly regain the faith in LP&L with the citizens of Lubbock.